Drop shipping is a form of retail business wherein the seller accepts customer orders without keeping stock on hand.
Instead, in a form of supply chain management, the seller transfers the orders and their shipment details to either the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer.
As such, the retailer is responsible for marketing and selling a product, but has little or no control over product quality, storage, inventory management, or shipping.
By doing this, it eliminates the costs of maintaining a warehouse – or even a brick & mortar storefront, purchasing and storing inventory, and employing necessary staff for such functions.
As in any other form of retail, the seller makes their profit on the difference between an item’s wholesale and retail price, less any pertinent selling, merchant, or shipping fees accruing to them.